Skip to main content

tv   [untitled]    May 10, 2014 9:30pm-10:01pm PDT

9:30 pm
veterans and continue -- webcor/obayashi works with the building trades and another thing that ted has reported he's actually outreaching out to 29 palms and the bases himself so ted is available anytime after the board meetings if we wanted to meet and talk further about all the efforts he puts into the veterans more than happy to and works with all the subtrade packages to bring veterans onto the project in the growth sector as well. progress to date with the adults tim donovan in our jaec meeting reported a very robust apprenticeship program and they are really starting to bring on a lot the electrical trades are
9:31 pm
very pleased with their apprentice program at this point and tim donovan reporting. >> moving onto the apprenticeship trims this is through the first quarter end of march 31st st the first quarter, with 143 apprentice trade hours and we are hitting our goal apprentice hours we have a goal of 16 and two-thirds percent for non labor and operators and right now we're at about 18 percent with apprentice labor and non operators so that's fantastic exceeding that goal and on the labor ors themselves we're very close to the apprentice goals it's dropped a little bit in the last quarter off by one really if you look closely that's very close then the operators that's a very good story at this point i believe
9:32 pm
that would be shimmick mostly they are on board right now and exceeding their apprentice goals with their operators so a lot of good to report for the pla apprentices and so forth so if there's any questions that completes my first quarter 2014 report. >> thank you harper. >> we realize that our structural bid was so big that we had to break it up and that sort of thing and some of these bid packages look pretty big to me the electrical and things are we trying to anticipate that so we don't go through the cycle of putting out too big of a bid package then having to pull it back and break it up up? because that loses so much time when we did that. >> absolutely, it's a large trade package and
9:33 pm
webcor/obayashi steve is going to address all the efforts going into it and the outreach to ensure that we have multiple bidders and looking at various items for small business and how that plays into it to ensure that -- the key is that we get multiple bidders and that's what web core has been focusing on with their outreach that's exactly what they are doing the other trade packages are a little smaller but the electrical is the key one and i referenced if there's any kind of addendum that will acknowledge and that's maybe one of the packages we want to make sure we give them enough time to have a full absorption so that just adds to our plan sort of speak with addressing those kinds of concerns. >> i noticed with one of the bid packages coming in we got
9:34 pm
down to two qualified is that competitive -- where do you draw the line as to yeah that's a good competitive cycle? >> you know the studies show very clearly that the more bidders you have the better prices you will have and over the last couple of months there's been significant effort in outreach to make sure the prequalified bidders do bid on these projects and that did happen where we had a bunch drop through in the process and we've addressed those various reasons and now going forward to addressing the bid manual every stone has at this point the team has been working very hard in the last couple of months to address those areas. >> and you will be hearing from steve humphreys about what they are actually doing to retain
9:35 pm
the bidder pool and extensive outreach at the next item. >> directors at the last board meeting i mentioned that we'll be bringing you our updates on the cost estimates and i'm here to give you that update is mark sevani. >> as maria mentioned the last meeting presented to you open bids and a 30 to 35 percent increase above estimate mainly as a result of the market conditions in san francisco and transbay and also the silicon valley and this mitigation plan utilizes contingencies and reserves the agenda is a recap of the july 2013 board approved
9:36 pm
budget we'll give you an update on the construction cost estimate completed recently by webcor/obayashi in february and the estimators and we also presented to you a litigation plan to allow us to stay in budget and a status in reserves and also provide you with findings and recommendations that were conducted by lelar associates and the outreach and schedule. >> the board approved a revised budget the approved budget updated the may 2010 budget taking into account market conditions and the cost increase of the structural steel package and the budget
9:37 pm
included recommended contingencies and reserves. this shows a breakdown of the construction costs within the board approved budget. the total cost excludeing -- the first construction cost including the reserves and the budget also includes program reserves and other costs including soft costs and program wide costs. >> the board approved budget was based on the first quarter 2013 market conditions and also
9:38 pm
the 95 percent construction and the the 3.5 escalation rate and contingencies and reserves based on model assessment and this is $8.2 million in contingencies that construction documents and also include a $62.5 million in construction contingencies and for escalation and program reserves. >> the board has awarded --
9:39 pm
this includes the transit center and the old terminal and temporary terminal. this includes 309 309 million dollars $309 million and $38.69 million for the bus ramp. >> we received updated estimates on february 2014 and again this was reconciled with the -- >> the budget contingency for
9:40 pm
the transit center and bus ramp $4 million for the transit center and the estimate includes $9.1 million for the transit center and includes an escalation and both escalations and the budget escalation is based on escalations starting the first quarter of 2013 whereas the escalation starts the first quarter of 2014 since it's up to today's market conditions. >> i don't understand why design contingent changed as much as it did i can see everything else but the design -- why would that necessarily have the same kind of escalation?
9:41 pm
>> when webcor/obayashi estimated the plans and a big part of that has to relate to the mechanical and electrical drawings they felt that the amount of conductors and so forth could increase between the 100 percent and the issue for construction documents the hundred percent cd's were completed in 2013 so there's a year lag and it's a contingency may not be used but it's a part of their estimates. >> if it's a percentage that's the highest differential as a percentage and you would think
9:42 pm
that design contingency since basically our designers are in place and everything -- that would be the lowest if anything not the highest differential. >> in general, if you are estimating a bridge where the quantities are unknown then the contingencies will be very low but. >> we're proposing changes that's coming up in the presentation where the design is done we're going to be changing things to reduce cost so i think that creates some design risk. >> that's correct. >> the difference between the budgets for direct cost and the estimates is $136.4 million and as a result of this increase the fees increased and the
9:43 pm
contingencies increased by $8.54 million so our target is $153.4 million. one of the differences is the changing market conditions. the escalation rate between the first quarter 2013 and third quarter of 2013 -- >> this is a depiction of the market conditions. there is approximately 13 projects currently under construction is shown in pink that are worth
9:44 pm
approximately 4 billion dollars and this project is is shown in yellow it's quite a bit of work in our neighborhood and quite a bit of work in the silicon valley that's restricting the bidding pool basically. this is a graph that's showing the market trend in san francisco for for the last 5 years the yellow graph is the engineering record index which measures the change in cost in labor and materials and the blue graph is the consultants index which measures the bidding index measures the bidding environment which includes the margin the bidders are asking for as well as the increase and cost of materials as you can see in the 2009 and 2010 period during the great recession bids were coming in
9:45 pm
below budget that's why the blue graph is below the yellow graph bidding below margin and as the market conditions improved and the economy improved in the 2012 period the bidders the bidders were asking for their margin and that's why you see an increase in the graph on the blue line. when we did the budget in july 2013 the projection for the 2013 first quarter bidding environment indicated a 2.2 percent escalation rate and that's is shown in the dashed gray line at that time we used 3.5 escalation rate to be prudent.
9:46 pm
>> the amount of scope that took place since the completion of the construction drawings. the estimated completed in february assumed $9 million between the 100 percent of construction documents and the issue for construction documents and unique design is reflected in hundred percent construction drawings contributed to the increase in the cost estimates. >> our mitigation plan includes cost reduction as well as utilization as contingencies and reserves and we've had we've identified mitigation measures and we've also reduced mitigation and reduce the
9:47 pm
estimates and adjustments and we've also evaluating another $5 million of litigation measures and proposing to use -- >> we've identified more than 40 elements that we can incorporate as reductions in the upcoming packages and planting and hard escapement elements on the roof top park and so that the construction so that the park can be constructed shortly afterwards we're also proposing to reduce --
9:48 pm
>> does not have any park lighting elements in it it's not for safety it's just for visual and we're proposing to reduce some of the red u.n. dancies as well as reducing the number of cameras. we would reduce that by two-thirds and keep enough cameras just for safety and security reasons since these two levels will not be occupied during phase 1 and also includes the glazing system and standard see through glass will be used and the back of the glass will be painted
9:49 pm
instead and we're also proposing to remove -- the cfrc is used to cover the exposed concrete and non structured elements and we'll paint the exposed concrete and we'll cover the other structural elements with prefinished panels instead and the mitigation plan will also be utilizing -- we have many elements in our transit. >> and the perimeter fence is stain less steel and by changing that to a painted
9:50 pm
galvanized finish we'd utilize a savings of $3.5 million. on the bus deck we currently have custom made steel on the perimeter of the bus deck and the cost of that is approximately $5.5 million and by utilizing the concrete barrier we would reduce the savings but $2.6 million and we've identified other cost reduction saves and bringing the total to $52.8 million. >> we currently have $210 million contingencies in reserves this mitigation plan would increase the design contingency and reduce and
9:51 pm
would reduce the program reserves to $115 million for a total contingency of 128.$3 million. the remainder of the contingency balance -- >> on that last slide to me is the most important slide of the whole thing it's where the bulk of our mitigation is happening and i'm not exactly clear on both how contingencies differ from reserves and what -- if you could give some examples of you know what a construction contingency is supposed to satisfy what are some of the events and what were the reserves supposed to do it would help me understand why certain amounts went further than others and certain amounts went in one direction versus the others if you could just go
9:52 pm
down through that one slide. >> i will for design contingencies if you have got plans that are 65 or 80 percent complete -- that's what design contingencies are for theoretically speaking as you mentioned earlier but to be honest you never have 100 percent plans there's always an incremental amount you need to cover so design contingencies are normal practices that you assign to trade packages before you bid them so you would allocate a certain amount of contingency for each trade packages the difference between the scope that you think you have in the plans and the scope that the contractor is estimating okay so that design contingency will be used before you award the project it's between the finish of the project and the award of the
9:53 pm
project. construction contingencies is to deal with un foreseen conditions during construction after the project has been awarded. it's utilized to mitigate conflicts between trades so also another form of construction contingency and program wide contingent that can be used whether it's soft cost or higher bids or construction conflicts in the field. >> so just a broader contingency? >> yeah, it covers all un foreseen program wide and escalation is accounting for escalating between the time that the plans are completed and the midconstruction period. >> yeah i still have the same problem with the design contingency when you are at 100
9:54 pm
percent designed documents -- >> that estimate included a design contingency of $9.14 million we don't know yet it's just a contingency there to account for things that they didn't catch in their estimates or things that scope requirements that takes place between the time we advertise the project to we award the project it's a contingency again it's not for sure but it's a normal practice. >> just to follow on the point it seems that it's escalation and it's not un foreseen construction conditions that we're trying to solve for here. is there a reason that you are proposing such a big draw of the construction contingency as opposed to the escalation
9:55 pm
reserve? >> no the escalation is going to be utilized so they are part of the estimate so i'm drawing from the construction contingency to fund the gap between the estimate and the -- >> so that escalation line is already spoken for? >> as we bid projects out. >> but i thought -- what i understood from the earlier slide is that 153 million was based on the current estimate based on our expectation of that escalation. >> yeah. >> or do we think there's going to be escalation beyond that 153? >> no it's the total difference between the total budget and the total cost and the cngc estimate which includes escalation. >> all right so i still don't understand why would we be drawing so much on construction
9:56 pm
contingency which is really meant for un foreseen conditions during construction there's a lot of construction to go and as soon as we get these awarded we'll have that locked down. down. >> okay so we have a total of 153 dollar difference $5 $55 million that $153 million number includes the escalation already in it so it's already escalated so the only other sources of funds to fill in the gap would be the program reserves and construction
9:57 pm
contingencies. did that make it clear or did i confuse you more. more. >> i don't know we're still going to have -- maybe it doesn't matter. >> let me clarify that. >> let me clarify that you are making a very good point what this shows is the total contingencies currently in the budget the fact of the matter is the design contingency and escalation they will be utilized as we bid out projects they are attached to trade packages. they will remain after all trade packages are utilized with the program and they will be used for construction conflicts and mitigation and construction challenges or any un foreseen conditions after we bid out all
9:58 pm
the projects. this chart was developed based on the model and even though -- they separate them from the base cost. after this mitigation plan is implemented the total construction contingency will be 73 million dollars and 41.73 will be cngc contingency that will amount to $7 million of the total construction budget. this is a before or after breakdown of the construction. again, this mitigation plan allows us to live within our means and be within budget it increases the construction costs
9:59 pm
excludeing the other program costs will remain the same. >> the success of this plan hinges on receiving responsive bids and harper your previous question regarding how many number of bidders we need in general we need 3 or 4 bidders that's the price in the market if we have one or two bidders you run the risk of people bidding higher than the market allows. we've retained the services to conduct a bidder
10:00 pm
survey to help us determine some of the reasons. so we can reduce our risk and exposure to higher bids with that i'd like to present natalie tailor to present her findings. she will be followed by west core and he will speak to that and share with us the program as well as the trade group schedule with that i'd like to turn it over to natalie. >> thank you: mark. lee land tailor associates was asked to perform a bidder survey. we pol